Have you been scammed by ‘El Chapo’?: FSCA warns South Africans about forex’ Durban boss’
The FSCA has urged people to avoid unnecessary risk and only transact with entities authorised by the body.
South African savers are losing millions to sophisticated financial scams. The Financial Sector Conduct Authority (FSCA) has issued an urgent warning after exposing several illegal operations.
The Financial Sector Conduct Authority (FSCA) is urging the public to exercise extreme caution when dealing with unauthorised entities, specifically naming “El Chapo” in a recent warning.
In a statement, the FSCA announced it had received information that El Chapo – self-described as an “independent forex trader” on Instagram – is actively soliciting R1,000 investments from South Africans, fraudulently claiming to generate returns using a trading robot.
This alleged scam then demands further payments from victims seeking to release their supposed returns, said the FSCA.
“Without commenting on the business of El Chapo, the FSCA confirms that El Chapo is not authorised by the FSCA to provide financial services to members of the public. El Chapo failed to respond to FSCA enquiries,” the financial market conduct regulator said.
Watch out for these forex scammers, warns FSCA
Unfortunately, this illegal operation is not isolated, as South Africans lose millions of rands every year to forex scammers and fraudsters. The FSCA has also issued warnings against signal providers such as Lethabo Mashiane and Vhuhwavho Lehaiva.
These individuals offer trading recommendations, a practice falling under the definition of financial services that mandates a proper provider licence. Providing such signals without a licence is a contravention of financial sector law and a criminal offence.
In another case, Neo Nkoko was flagged for soliciting funds for forex trading opportunities, encouraging investors to deposit money into his bank account before abruptly ceasing communication.
Similarly, the FSCA warned against Barclays Academy, which recruited members via Facebook with promises of unrealistic returns on solicited funds. Such promises of unrealistic or exaggerated returns are a tell-tale sign of danger, said the regulator.
Scammer red flags
The FSCA has asked South Africans to protect their hard-earned money by recognising red flags, such as:
- Unrealistic or exaggerated returns
- Offers made on social media platforms
- Requirements to pay for services upfront
- Requirements to pay more money to have your investments returned
- Requirements to pay for training
- Claims that you must act and pay urgently i.e. creating a sense of urgency
- Vague information about the investment product.
The FSCA has urged people to avoid unnecessary risk and only transact with entities authorised by the body.
“Authorised financial services providers must clearly display their status in their documentation. The FSCA advises verifying any FSP number via their toll-free number, 0800 110 443, before making any payments.”